Transcoding traditionally has been done on dedicated hardware located inside the data centers and head ends of telecommunications providers and cable operators, or in the data centers of content companies and CDNs. For example, Netflix encodes each movie it has 120 times to meet the needs of all the devices it supports. But as online video becomes more popular and devices proliferate, transcoding becomes an issue for everyone, from small blogs that want to do video to Disney.

Now, instead of buying dedicated hardware and software, they can go to Amazon, which will offer folks 20 minutes of transcoding each month for free. After that, it will charge between 0.015 cents per minute to 0.036 cents per minute depending on whether the customer wants high-definition or standard definition, and where in the world the transcoding will occur.

From the Amazon release:

In addition, Amazon Elastic Transcoder provides pre-defined presets for popular devices that remove the trial and error in finding the right settings and output formats for different devices. The service also supports custom presets (pre-defined settings made by the customer), making it easy for customers to create re-useable transcoding settings for their unique requirements such as a specific video size or bitrate. Finally, Amazon Elastic Transcoder automatically scales up and down to handle customers’ workloads, eliminating wasted capacity and minimizing time spent waiting for jobs to complete. The service also enables customers to process multiple files in parallel and organize their transcoding workflow using a feature called transcoding pipelines. Using transcoding pipelines, customers can configure Amazon Elastic Transcoder to transcode their files when and how they want, so they can efficiently and seamlessly scale for spikey workloads. For example, a news organization may want to have a “high priority” transcoding pipeline for breaking news stories, or a User-Generated Content website may want to have separate pipelines for low, medium, and high resolution outputs to target different devices.

Amazon isn’t the first in the cloud encoding/transcoding market, but it does have the largest customer base in the cloud, including Netflix, which clearly delivers a lot of video. As I mentioned earlier, Microsoft has launched a Media platform service that will include transcoding, aimed at giving customers all the tools it needs to deliver streaming video content online. Microsoft’s service uses the same tools it used to host the London Olympics last year. Other companies such as Encoding.com provide cloud encoding services as well.